U.S. Senate Democrats are trying to pass more than $80 billion in tax reductions. Their obstacles include Republican plans to cut even more.
As soon as tomorrow, the Senate will begin procedural votes on reviving dozens of tax breaks that lapsed Dec. 31 and extending them through 2015. The package would let companies such as General Electric Co. (GE) defer U.S. taxes on overseas financing income and reinstate the production tax credit for wind energy.
Republicans support most of the breaks, which aren’t paired with spending cuts or tax increases. The Senate Finance Committee approved the bill in a bipartisan vote last month.
Still, the Senate floor votes are Republicans’ opportunity to make changes. Though they’re in the minority, their strategy matters because at least five Republicans are needed to join Democrats on votes to advance the bill. If Republicans unite and insist on considering amendments, they can block the bill.
The number of Republicans needed could rise if some Democrats object to the lack of offsets in the measure, meaning it would increase the federal budget deficit by $84.1 billion over the next decade. Republicans are insisting on offsetting Democrats’ proposed extension of expanded unemployment benefits.
Also in the package are an extension of the research and development tax credit, the ability for individuals to deduct state sales taxes and the 50 percent bonus depreciation for capital investments.
Possible Republican amendments include repeal of the excise tax on medical devices, other changes to taxes imposed by the 2010 health care law and proposals to end tax subsidies for energy, said a Senate Republican aide, speaking on condition of anonymity to discuss plans that haven’t been finalized.
Disputes over amendments have been snarling the Senate, as Republicans in the minority complain about their inability to shape legislation and Democrats respond.
Today, that squabble risks scuttling an energy-efficiency bill.
“Republican obstruction is bringing the Senate to its knees again and again,” Senate Majority Leader Harry Reid, a Nevada Democrat, said today.
There will be lots of talk about possible amendments and the tax bill will pass unchanged by the end of the month, said a Senate Democratic aide who isn’t authorized to speak publicly.
Even if the Senate passes the tax bill, its fate is far from certain in the Republican-controlled House.
House lawmakers have taken a different approach, breaking out individual tax provisions and offering proposals to make them permanent. The first such bill, on the research credit, passed the House 274-131 on May 9 with 62 Democrats joining Republicans to support the measure.
House leaders also object to some of the tax breaks, particularly those for renewable energy.
“Warts and all, the Senate should pass the tax extenders bill,” the group said in a statement today. “Ideally, the best of these tax relief items would be made permanent law, and the rest would be plowed into pro-growth tax reform. For now, though, the mandate for the Senate is clear: do no harm.”
The bill is H.R. 3474.
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